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RedTube Claims WEG Leaked Trade Secrets, Cybersquats

Rhett PardonNov 2, 2009 4:15 PM PST

LOS ANGELES — Operators of RedTube.com last week filed a lawsuit against WEG, claiming the company scooped up a number of RedTube domain names with the intention to divert and acquire its traffic and profits.

The suit against WEG, formally known as Web Entertainment Group Inc., said that the Boca Raton, Fla., company purchased RedTube.org, RedTube.pl, RedTube.fr, RedTube.com.br, RedTube.br and RedTube.ca between 2007 and this year in an attempt to ride on RedTube.com’s coattails of “success, fame and goodwill” by using “confusingly similar names and domains.”

All of the sites, according to introduced evidence, offer free access to adult content, using a style and format similar to RedTube.com’s.

At the heart of the suit filed last week at U.S. District Court, however, are claims that go well beyond cybersquatting.

RedTube.com also claims that a former company officer leaked a confidential memo that provided RedTube.com trade secrets when WEG apparently contemplated purchasing the tube site.

The leaked memo, RedTube.com operators claim, included business secrets, including marketing plans, revenue, profit margin and other financial data.

The suit claims that John Skorik, the former WEG company executive, provided the memo to Paolo Cammarata and Kevin Cammarata, the owner of Teen Revenue who filed a suit earlier this year at Los Angeles Superior Court.

Kevin Cammarata claims in that suit that RedTube unlawfully offers free movies as loss leaders in an attempt to crush the competition. Kevin Cammarata is seeking to have RedTube.com shut down by the court.

The Cammaratas' attorney, Jay Spillane, told XBIZ on Monday that that suit continues, with a judge weighing some of the defendants’ motions to dismiss.

In RedTube.com’s claims relative to the confidential memo, the company said that WEG executed a confidentiality agreement to suitors when it contemplated selling the company in early 2008.

“The confidential memorandum was watermarked so that any copy of the memorandum bore the words 'Web Entertainment Group Inc.' in large type running diagonally from the bottom left-hand corner to the top right-hand corner of each page,” the suit said.

The suit claims that WEG had no intention on buying RedTube.com and that the watermarked confidential memo ended up attached to a declaration that was introduced by Paolo Cammarata in the Los Angeles Superior Court action.

RedTube.com said in the suit that if it were not for the introduction of that memo, the Cammarata lawsuit “never would have been filed.”

RedTube.com, whose parent company is Hong Kong-based Bright Imperial Ltd., said that it already has spent "hundreds of thousands of dollars in attorneys fees and costs" in defending the Cammarata litigation it refers to as the “Cammarata Costs.”

RedTube.com operators are asking the court to award unspecified damages and an injunction using the “RedTube” trade name on its sites.

It also is asking the court to find the Cammarata litigation costs were a direct result of WEG’s misappropriation of RedTube.com trade secrets and awarding those costs as damages.

WEG officials late Monday told XBIZ that they just received a copy of the lawsuit and are reviewing it with their attorneys.

“Web Entertainment Group Inc. believes the essential parts of the allegations are without basis and are not well-taken,” the company said in a statement.

Former WEG company executive Skorik told XBIZ that RedTube.com's allegations are false.

“I would simply like to state that the accusations brought against me in this lawsuit are untrue as will be proven in a court of law,” Skorik said. “I will provide further comment once I am able to determine why RedTube has made these claims against me.”

XBIZ was unable to reach RedTube.com officials for comment by post time.